Inventory Is Plentiful, And Sellers Are Willing To Negotiate On Price

A report from the New York Times on Connecticut. “In late November, there were 206 houses and 17 condominiums on the market in Darien. According to the SmartMLS, the median sale price of a home in 2018, through Nov. 27, was $1.385 million, down from the median sale price of $1.42 million during the same 11-month period in 2017. Suzanne Okie, an agent with Halstead Real Estate, said housing inventory is currently plentiful, and sellers are willing to negotiate on price. She attributed this buyers’ market to the uncertainty surrounding the recent elections, among other things.”

“‘People are not jumping to buy their next house,’ she said. ‘It’s been a wait-and-see environment, as everyone’s looking to see how the new tax laws will affect them.'”

The Colorado Springs Gazette. “In November, Colorado Springs-area home sales totaled 1,096, down nearly 13 percent from the same month last year, says a new report by the Pikes Peak Association of Realtors. Sales now have fallen for nine straight months on a year-over-year basis.”

“The city had 2,153 homes listed for sale in November, a 31 percent increase from a year earlier, the report showed.”

“A tight supply of homes available for purchase has contributed to a months-long decline in sales, as has a traditional late-year slowdown in buying and selling, said Joe Clement, broker-owner of Re/Max Properties in Colorado Springs.”

“‘It’s winter, it’s snowing, I’m not buying a house,’ he said of the mindset that takes hold late in the year.”

“‘If you look back at 2012 or 2010, we’re looking good,’ Clement said. ‘It’s strong. The last couple of years have been extremely strong; 2017 was phenomenal. So to say we’re off from 2017, it’s not like it’s a time to panic because we’re not that far off.'”

The Seattle PI in Washington. “While Seattle’s real estate year came in like a lion, it’s going out like…well, a still-expensive lamb. 2018 started with Seattle on its way — and eventually setting — records for leading the market, whether by Northwest Multiple Listing Service standards, which found historic low inventory in the market, or by the Case-Shiller Home Price Index, where the city had the longest climb and steepest drop this year.”

“It’s more what Jay Morrison, CEO of the Tulsa Real Estate Fund, calls a ‘neutral market.'”

“‘In general what we’re seeing is a lot of the market has settled, and it is providing an opportunity for homeowners to be able to purchase at reasonable prices — reasonable meaning not escalated or inflated, like in a seller’s market,’ Morrison said. ‘It’s a great time or opportunity for newbie homeowners or an investor to get involved.'”

The Arizona Republic. “A day after Katie Lebowitz and David Dronning closed on their newly renovated north Phoenix house last summer, they found water all over their kitchen floor. A plumber scoped the sewer and told the couple it had collapsed, and the house would flood if they ran water. It was just the beginning of the problems.”

“The former foreclosure house that government-backed Fannie Mae had fixed up and sold to the couple also had hidden mold, asbestos and electrical problems that cost more than $100,000 to fix. ‘It took five painful months of living out of storage units and spending all of our money to fix the house,’ Dronning said. ‘It’s been a nightmare.'”

“A record number of Valley homes have been renovated and flipped during the past few years. But the rush to fix up bargain homes and sell them for a profit has led to big headaches and costs for some buyers.”

“‘Some flippers just want to put enough lipstick on a house to sell it,’ said metro Phoenix home inspector Tim O’Neall, who teaches classes to the real estate industry about disclosing home problems to buyers. ‘About 85 percent of my examples of bad work in homes come from flips.'”

“Many recent Valley homebuyers, signed an ‘AS IS’ agreement to buy their home because of the competitive housing market. But the couple is suing Fannie Mae because neighbors and others have told them their house’s problems were known about and not fixed as part of the renovation.”

“Fannie Mae said it doesn’t comment on pending litigation. ‘I haven’t ever seen this many lawsuits for home flips,’ said Valley real estate attorney Patrick MacQueen. Almost 70 percent of his cases now are homeowners suing over bad flips.”

“I had one client who bought a flipped home and then tried to put in a pool,’ said MacQueen, who is representing Lebowitz and Dronning. ‘As their contractor started digging, he found the house had a pool that had been filled up with an old toilet and other stuff from the house’s renovation. It was bad.'”

“Homeowners can sue contractors that aren’t licensed over bad work and can sue real estate agents who knew about a house’s problems and didn’t disclose them during the sale. ‘Suing is the only recourse some homeowners stuck with badly fixed up homes have,’ MacQueen said. ‘It’s not an easy process, but some homeowners are so mad they are doing it.'”

‘the couple is suing Fannie Mae because neighbors and others have told them their house’s problems were known about and not fixed as part of the renovation’

Jeebus, I could tell foreclosure stories that would make your hair curl. People forget what a bunch of crooks these guys were. There’s a general level of sleaze that comes directly from the GSE’s and the company they keep, IMO.

Ben, I wanted to ask you about this after your Peak Prosperity podcast (which was great, btw). You mentioned lender, GSE, HUD, etc, sales as an alternative to foreclosure auctions and buying from FBs. Are you really optimistic that lender and bank sales will work efficiently this time for buyers, or be any fairer/cleaner than say Auction.com type outfits, which we know are faulty at best?

The above indicates sales from Fannie/Freddie will be riddled with pitfalls. And I remember tons of shenanigans, cronyism, and corruption in bank sales around 2009-12. Of course there is no good alternative, but it seems like the lenders are already setting up for another round of mischief and this Phoenix couple’s house was just a prototype of things to come.

As long as real estate has been purchased and sold, there’ve been shenanigans. I don’t know why “this time would be different.” 50 years ago, there were “pocket listings” of foreclosed homes among bankers and their buddies in real estate. Same as it ever was.

That’s a rough commute to Denver, especially with the I-25 widening project between Monument and Castle Rock happening for the next several years. Add some snow and ice and it could be 3-4 hours of driving each way.

From the Colorado Springs Gazette article:
– YoY sales declines (check): “Sales now have fallen for nine straight months on a year-over-year basis.”
– Housing “shortage” narrative (check): “…sales have slid, in part, because there aren’t enough homes to accommodate all buyers…” [This, of course, has NOTHING to do with insanely high prices for shelter-buyers.]
– Inventory increasing (check): “The city had 2,153 homes listed for sale in November, a 31 percent increase from a year earlier, the report showed.”
– It’s NOT time to panic narrative (check): “So to say we’re off from 2017, it’s not like it’s a time to panic because we’re not that far off.”
– Unsustainable price increases (check): “Prices now have risen for 48 straight months on a year-over-year [YoY] basis.”
– From the comments: “Don’t panic everyone. Dont panic!!!!! Housing Bubble 2.0 will go on forever….just don’t panic!”

The Colorado Springs Gazette. “In November, Colorado Springs-area home sales totaled 1,096, down nearly 13 percent from the same month last year, says a new report by the Pikes Peak Association of Realtors. Sales now have fallen for nine straight months on a year-over-year basis.”

This is quite simply un-possible. Clearly the data is wrong. I was informed by multiple realtors at open houses throughout the greater Colorado Springs area that it’s different here due to a) Everybody wants to move here, especially the CA equity locusts; b) the five military bases in the area ensure a robust local economy and federal payroll; with lots of turnover each year; and c) the banking sector still throws up barriers to the (thriving) legal marijuana industry in Colorado Springs, so the pot entrepreneurs are buying up houses with their (legal) drug proceeds to park their (vast) profits.

So clearly, Ben, any suggestion that it’s not different here, or that the local RE is experiencing a downturn, must be in error.

Suzanne Okie, an agent with Halstead Real Estate, said housing inventory is currently plentiful, and sellers are willing to negotiate on price. She attributed this buyers’ market to the uncertainty surrounding the recent elections, among other things.”

Whatever you say, Suzanne. Surely buyer wariness at the proliferating indications of a bursting housing bubble has nothing to do with the rising inventory as panicked FBs and speculators stampede for the exits.

So to say we’re off from 2017, it’s not like it’s a time to panic because we’re not that far off.’”

This longtime renter is cool as a cucumber, Joe in Colorado Springs. Not even a hint of panic, though I’m guessing the “clients” of yours who bought at the peak of the market last year can’t say the same.

“The former foreclosure house that government-backed Fannie Mae had fixed up and sold to the couple also had hidden mold, asbestos and electrical problems that cost more than $100,000 to fix. ‘It took five painful months of living out of storage units and spending all of our money to fix the house,’ Dronning said. ‘It’s been a nightmare.’”

Gosh, who’d have thunk that a scrupulously honest outfit like Freddie Mae would hire cowboy contractors to do shoddy rehabs so they could unload their money pits on wide-eyed ingenues like Katie & David.

A lot, IMO. Most don’t follow tax laws or savings or financials closely, comforted by the newest reality show every night. For most of the public they hear “My taxes were cut” but will never see the result until April 2019 when they realize it wasn’t much ad their prize deductions are gone!

“Think of how stupid the average person is, and realize half of them are stupider than that.” -George Carlin

I just got back from Papa Murphy’s “you-bake” pizza. While I was waiting a hottie comes in to pick-up a telephone order, but the EBT (social food benefit) machine wasn’t working, so she walked-out. The least a hottie could do is give it up to a breadwinner.

Maybe she did but there just part of the others that take advantage of the “system”. I have seen families buying groceries with food stamps and then loading them into a brand new Cadillac Escalade or other high value vehicle. Not saying all food stamp users, but some, and some is enough IMO.

“‘It’s winter, it’s snowing, I’m not buying a house,’ he said of the mindset that takes hold late in the year.”
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And they are idiots. So what if it’s snowing? So what if it’s cold? If I can get a good deal on a shack I’ll buy when no one else would be, like buying shorts in the winter and sweaters in July – you’ll always get the best deal. Put an offer in December, close in January, paint and clean in February, move in March. “An educated consumer is our best customer”.

Oh dear – now we’ve gone and done it. The arrest of Huawei’s deputy chairwoman (and daughter of the founder) is going to infuriate the Chinese. Call it a hunch, but I suspect the days of Chinese embezzlers, er, investors, showing up with suitcases of cash to overpay for West Coast shacks just came to a screeching halt. And if the Chinese retaliate by dumping their $1.3 trillion in US Treasuries, things are really going to get Barnum & Bailey.

In San Francisco, the median price of single-family house sales that closed in November fell to $1.435 million. This is down a blistering $265,000 or 15.5% from the crazy peak in February of $1.7 million – a time when only the sky was the limit. And down by $60,000 from November 2017. This puts the median house price below where it had first been in May 2017.